Placing Experience Within Reach: QRC, NFC and the Future of Contextual Activation | By Charles Sayers

When asked to describe an innovative or engaging marketing experience, most of us talk about the experience itself: the interaction of a customer with a website, with a mobile device, with a kiosk, interactive display or a rich, omnichannel journey that spans multiple devices, touchpoints and interactions.

But that is a view of an experience from the inside. But how will a customer connect to that experience? What is the trigger that launches that experience? We call this customer experience “contextual connectivity.” The demand for contextual connectivity is growing. Just two years ago, more than 13 million barcode apps, QR scanners and pricing apps were downloaded by the first wave of smartphone enabled consumers. Today, merchants are racing to meet the demand. According to Multichannel Merchant Outlook 2012-2013, the number of merchants using QR codes as part of their marketing strategy has more than quadrupled to nearly half (47 percent). In 2012, just 8 percent of sellers reported employing them.

As digital experiences extend from virtual to physical (and back again), it’s essential that tools are available to bridge the experiential divide. Contextual activation – which can incorporate everything from QR codes, NFC tags, Bluetooth Low Energy, and sensory and gestural recognition – is a practical bridge between a customer and an experience.

2.
The Best Contextual Enablers Are Instantaneous and Transparent
Contextual enablers stimulate experience connectivity –
presenting a virtual on-switch to engagement. But, like
switches, enablers constitute a means to an experiential
beginning. Their purpose is to transition focus from
point-physical to point-virtual (and vice versa) without
slowing the speed of the experience. At their best, they
must be effortless and instantaneous.
SapientNitro spent several months evaluating the tools
and technologies for a major CPG firm. To evaluate
contextual enablers, we looked beyond the appeal and
design of its technology. We also considered how that
technology fits into relevant lifestyles, the sophistication
and scalability of its supporting infrastructure, and the
general market awareness of how it works and how
deeply it is being adopted. These are our predictions.
When asked to describe an innovative or engaging marketing experience, most of
us talk about the experience itself: the interaction of a customer with a website,
with a mobile device, with a kiosk, interactive display or a rich, omnichannel
journey that spans multiple devices, touchpoints and interactions.
But that is a view of an experience from the inside. But how will a customer connect to that experience? What
is the trigger that launches that experience? We call this customer experience “contextual connectivity.”
The demand for contextual connectivity is growing. Just two years ago, more than 13 million barcode apps,
QR scanners and pricing apps were downloaded by the first wave of smartphone enabled consumers. Today,
merchants are racing to meet the demand. According to Multichannel Merchant Outlook 2012-2013, the number of
merchants using QR codes as part of their marketing strategy has more than quadrupled to nearly half (47 percent).
In 2012, just 8 percent of sellers reported employing them.
As digital experiences extend from virtual to physical (and back again), it’s essential that tools are available to bridge
the experiential divide. Contextual activation – which can incorporate everything from QR codes, NFC tags, Bluetooth
Low Energy, and sensory and gestural recognition – is a practical bridge between a customer and an experience.
before we can
engage a digital
experience,
we have to
get to it…and
we expect that
connection to be
instantaneous.

3.
Prediction 1: Within the Next 12 to 18 Months, QRC Will Become More Widely
Used to Connect Virtual and Physical Experiences at the Point of Sale
QR (Quick Response) code technology was invented in
1994 by Toyota to help track vehicle parts during the
manufacturing process. Today, these two-dimensional
“barcodes” can be read by dedicated QR code readers
and software-enabled camera phones. The technology
has slowly made its way into the marketing mainstream
thanks in part to their use in print and mobile couponing.
As a contextual enabler, QRC has the advantage of
being both a connector and data store. A single QR
code can store up to 7,089 numeric characters, 4,296
alphanumeric characters, 2,953 binary units, or 1,817
Kanj/Kana. These codes can also be generated and
distributed quickly and inexpensively, so they can be
incorporated easily into existing packaging, collateral,
signage, digital and online display.
But QRC is not without long-term disadvantages.
Barcode scanning software is not universally supported
across every mobile platform (such as Apple’s iPhone),
which requires users to download one of many apps to
engage the device’s camera to scan and load URLs and
other transferable experiences. And while both Android
and Blackberry provide native QR support on some
models, the lack of standardization makes choices and
enabling experiences different from device to device.
More troubling, consumer adoption of QR codes has
remained stubbornly slow. eMarketer recently reported
that just 11 percent of consumers have a QR reader on
their phone, and of those, just 3 percent have used them.
Plus, the image of the code must be readable for
the scanner to understand and connect the user to
the targeted experience. Printing is rarely durable –
especially on packaging and print material – so codes
risk degrading and becoming obsolete quickly.
Bottom-line: In terms of near-term convenience and
ease of access, QRC is the contextual enabler of choice.
However, it is an interim solution at best.
Placing Experience within Reach: QRC, NFC and the Future of Contextual Activation
Fig. 1
Global QR Usage Remains Limited
QR Code Usage, by Country January 2013
U.S. UK Germany France
4-Country
Average
4-Country
Average
(Ages 18-34)
19%
Fewer than 1 in 5 Americans have ever scanned a QR Code.
And this is above the global average. Even among 18- to
34-year-olds, just slightly more than 1 in 4 have used the
technology.
15% 14% 13% 15% 27%

4.
Placing Experience within Reach: QRC, NFC and the Future of Contextual Activation
139
Among smartphone shoppers who have used QR codes, general product information, promotions and prices lead in terms of
what people are looking for when they scan.
Source (all charts on this page) Nielsen Research. “The Mobile Consumer: A Global Snapshot” February 2013
General Product Information
Promotions
Price
Product Reviews
Loyalty/Rewards
Store Location
Other
69%
65%
57%
42%
40%
29%
09%
Fig. 3
Barcode, QRC and NFC usage in the United States lag Turkey, India and China
Selected activities performed among smartphone users within the past 30 days,
February 2013
03%
NFC is most popular in Southeast Asia,but throughout the world QR codes have the most widespread use.
Australia Brazil China India Italy
85%52%50%38% 42%42%28%40% 30%30%22%14% 20%20%11%04% 42% 48% 59% 10% 34% 48%22% 43% 55% 04% 28% 38%14% 12% 38% 38% 18% 24%03% 11% 13% 15% 04%
Russia South Korea Turkey UK U.S.
Location-based services/GP5
Mobile banking
Barcode or QR scanning
NFC/Mobile wallet
Fig. 2
Scanners Are Looking For...
QR Code Uses Among Smartphone Shoppers (% of smartphone shoppers who have used
QR codes, indicating for which types of information they used a code.) January 2013

5.
Placing Experience within Reach: QRC, NFC and the Future of Contextual Activation
Prediction 2: Within the Next One to
Three Years, NFC Will Become the Most
Commonly Used Contextual Enabler
Connecting Physical and Virtual
Experiences at the Point of Product
Like QRC, NFC technology has been around awhile
– about 15 years. During that time, many companies
(ranging from AT&T to Google) have invested in its use.
According to a recent report from Juniper Research,
an estimated one in five smartphones will have NFC
functionality by 2014. That’s nearly 300 million handsets.
According to Forrester Research, more than 100 million
NFC-enabled devices will be shipped by the end of
2013 and, according to ABI Research, the number of
NFC-enabled devices on the market will grow to more
than 800 million by 2016. Those devices extend beyond
smartphones and include consumer electronics such as
TVs, game consoles and tablets.
Consumer use of NFC, as well, has been limited.
eMarketer reports 84.6 percent of consumers have
heard of it or used it, while just 20.8 percent report
using it ‘regularly.’1
The NFC infrastructure across
retailers, quick-serve restaurants and transportation
sites continues to develop. In the United States, Gartner
expects mobile NFC transactions to account for 5
percent of all mobile payments by 2017.
The final challenge with NFC is a simple one: cost. NFC
costs $0.20 to $0.10 per unit even at scale – prohibitive
for most CPG firms shipping billions of units. The cost
of NFC technology remains at $2 to $3 per unit for retail
packages – prohibitive for most CPG firms.2
Home Depot has rolled out a nationwide mobile tag
program to solidify purchase intent in its store by delivering
additional product information directly to a customer’s
smartphone. The effort incorporates QR codes on to
product tags, which give customers immediate access
to relevant information such as ratings, reviews, how-to
guides, and videos on specific products. Additional codes
will be placed on direct mail pieces and on store shelves.
Strappy allows train passengers in Japan to access
advertisements and other information via a Near Field
Communication (NFC) equipped strap cover. Passengers
simply touch their compatible phone to the strap cover and
get immediate access to the content being delivered to that
NFC point.
1
eMarketer cited NetBiscuits 2013 People’s Web Report.
2
Scandit.com, 2013.

6.
NFC: Enabling Contextual Activation
Beyond Mobile Coupons
Smart Jewelry
In the United Kingdom, British designer John McLear has developed an NFC-enabled,
smart ring that never requires charging and enables actions such as unlocking NFC-
friendly doors or social sharing to smartphones and tablets.
Smart Labeling
Helping to improve the quality of life for the visually impaired, TapVision incorporates
NFC into product labeling so that contents can be heard (vs. read). It also enables a
social link to share product information through social media.
Smart Golf
The Birdie NFC Golf Ball Marker acts as both enabler and data repository. These NFC
markers can be preloaded with promotional offers, prepaid concession items, as well
as enable the ignition system on the duffer’s golf cart.
Smart Paper
Researchers from Intel, the University of Massachusetts and the University of
Washington have teamed up to build an e-paper display that can be powered by the
Near Field Communication (NFC) signal from a smartphone. The smartphone not only
enables the e-papers activation, it transfers the required energy to it to enable the
content display.
Smart Toys
In Japan, Nintendo is introducing NFC capabilities in its Nintendo Wii U by offering a
collection of NFC-enabled characters (including main character Pikachu), which enables
a symbiotic experience exchange between virtual and physical characters.
Placing Experience within Reach: QRC, NFC and the Future of Contextual Activation
THE BEST
TRIGGERS MUST
(AND WILL BE)
INVISIBLE.

7.
Placing Experience within Reach: QRC, NFC and the Future of Contextual Activation
As a long-term option to contextual enabling, NFC
offers significant advantages over QRC. It can work
with or without an Internet connection and seamlessly
connect to a wide range of experiences with or
without an intermediary mobile app. Unlike QRC, NFC
performs consistently well in all physical conditions and
environments and employs a single, global standard to
ensure experiential consistency and greater awareness
and understanding of its use.
Sensory and Image-Based Enablers Are
Novel but Inconsistent
With the rise of wearable computers like Google Glass
and Samsung’s Galaxy Gear SmartWatch, it is easy
to imagine a world populated by everyday objects
that can connect to virtual commentary and ancillary
product information anywhere and everywhere. These
types of enablers typically lead to augmented reality
experiences that add a level of virtual information,
superimposed upon a physical context.
Acrossair, for example, is enabled by a map location.
Aurasma can open viewable videos, animations and
effects enabled by everyday objects. And SnapShop
allows visualization of virtual furniture in your living room.
But the challenge with image-based enabling lies in the
endless variations of physical objects. Angles, lighting
and visual noise all influence the amount of twisting and
adjusting needed to activate the experience. Frustration
can rapidly mount as individuals try to aim their device
at exactly the right position.
So, for now, image recognition as an enabler does not
satisfy the invisible and instantaneous expectation of a
demanding, always-on customer.
Peapod.com is putting virtual stores featuring billboards
of larger-than-life grocery aisles on train platforms where
customers can shop using Peapod’s mobile app.
Commuters can use the app and then shop by scanning
barcodes of products displayed on the billboards. The
purchases are then scheduled for delivery at a time of
the buyer’s choosing.

8.
143
Placing Experience within Reach: QRC, NFC and the Future of Contextual Activation
Prediction 3: Within the Next One to Three Years, BLE and
NFC Will Work Together to Enable Experiential Connections
between People, Products, Objects and Environments
When Apple announced that BLE (Bluetooth Low Energy) would be included as a
standard feature in all future generations of iPhones, the company unleashed a flood
of predictions heralding the death of NFC.
NFC is limited to a distance of approximately four
centimeters while Bluetooth can reach more than
more than 914 centimeters. Especially given BLE’s
lower energy need, many considered NFC’s days to
be numbered.
In the wireless world of in-store activation, claiming
that one’s options are either BLE, NFC or nothing is like
saying oranges should make all other fruits obsolete.
While it may seem that BLE wields several advantages
over NFC, NFC has a few advantages of its own – such
as lower cost, better security and better transmission
effectiveness in environments that are often immersed
in potentially disrupting electronic noise.
In our mashed-up, omniexperiential world, one option
doesn’t have to necessarily kill the other. Together,
they can offer not only a better enabling experience
to consumers, but, with its extended transmission
distance, BLE can offer an enhanced experience within
physical locations.
Alone, NFC maintains an experiential edge. Together,
BLE and NFC offer an experiential advantage.
A comparison of the characteristics people value
most in a seamless, unobtrusive contextual
enabler (accessibility, ease-of-use, performance,
responsiveness, consistency, security, and investment)
shows why NFC paired with BLE offers the greatest
potential for long-term use and adoption.
While QRC scores high marks for accessibility and
requires the lowest investment, its weaknesses
in performance, responsiveness, consistency, and
security could not only lead to lower use, but QRC
could actually degrade the quality of experience.
ShopSavvy, GroceryIQ, ShoppingList, recipe.com and
Remember The Milk can recognize product photos, locate
discounts and coupons, or create a shopping list.

9.
Placing Experience within Reach: QRC, NFC and the Future of Contextual Activation
BLE offers lower cost to both consumer and merchant
along with a greater transmission range, but the custom
pairing required across a variety of footprints can be
cumbersome. Passive enablement of an experience
can also be problematic if consumers consider the
delivery of unsolicited messaging and content to their
device based on location as intrusive.
NFC, on the other hand, ranks ‘high’ across all
experience levels but, until it is more widely
incorporated as a standard feature in a variety of
electronics and mobile devices, it is not as easily
accessible; it also currently requires a higher level of
investment.
From an innovation perspective, NFC is also trending
towards a higher place in the ‘Innovative’ category,
scoring high marks across both readiness (the
infrastructure required to support the technology), and
‘Experience Differentiation’.
INVESTMENT
LOW
Technology
currently exists.
Simply create
and scan
HIGH
Need to embed
NFC tiles/signals
into packaging
and displays
HIGH
Pairing logistics
and cost of BLE
transmitters currently
higher than NFC
MODERATE
Requires connection
to proprietary
packaging or
brand imagery
CONSISTENCY
LOW
Multiple tech
variations
HIGH
Single global
standard
MODERATE
New global
standard is not
backward
compatible
HIGH
Based on
distinctive
characteristics of
target image
SECURITY
LOW
Code response can be
altered by 3rd party
HIGH
Built into
device
MODERATE
Greater transmission
distance risks
delivery of
authorized content
HIGH
Response tied
directly to
proprietary
brand design
RESPONSIVENESS
LOW
Slow
HIGH
Rapid date
exchange
HIGH
Rapid date
exchange
LOW
Slow
PERFORMANCE
LOW
Lighting. App
performance
HIGH
No lighting issues
or aesthetic
requirement
LOW
Electronic noise
can interfere with
transmission and
reception
LOW
Lighting. Visual
noise. Distinctive
focal point
EASE OF USE
MODERATE
Requires an internet
connection
HIGH
Native device
functionality
MODERATE
Requires opt-in
pairing at point
of use
MODERATE
Incorporates
app and camera
integration
ACCESSIBILITY
HIGH
Many code
scanning apps
available
MODERATE
But growing in
variety of new
tech releases
HIGH
Available in
newer generations
of smartphones
and tablets
LOW
Limited app options
NFC Maintains an Experiential Edge
QR Codes deliver accessibility, but low performance and responsiveness limit its value. NFC offers the highest quality
experience, but is expensive, and has limited accessibility. Bluetooth Low Energy remains an option perhaps best combined
with NFC. And augmented reality remains a higher-risk, longer-term play.
QR Code /
Bar Code
NFC
BLE
AR

10.
Placing Experience within Reach: QRC, NFC and the Future of Contextual Activation
145
The Enabled Conclusion
Regardless of the sophistication and enhancement of any digitally-charged experience in the future, the need to
activate it will remain. Today, NFC appears to offer the greatest potential to achieve that connectivity seamlessly,
consistently and quickly. Working together, BLE and NFC combined to offer a great value combination that serves
the connecting needs of the consumer and the market intelligence needs of retailers. Until companies are willing
to step up their investment to either of these new technologies, expect to continue to see QRC as an adequate,
low-cost alternative.
Plotting the Future of Contextual Activation
NFC is the most strategic investment, closely followed by BLE, although the payoff for both
will require more time to establish the necessary infrastructure to enable broader adoption.
QR Codes – despite much skepticism in the market – are still the most inexpensive starting
point marketers can use today to get their processes in place.
Experimental
Contextual activation tools
which are in the early
stages of development and
exploration
Practical
Market-ready solutions
which have become
broadly adopted and
deliver basic value
Emerging
Promising contextual
activation tools that
require investment in
infrastructure to enable
broader adoption
Innovative
The future for marketers;
the greatest opportunity
for adoption and support
in both the long and short
term
Readiness
Experience Differentiation
Practical
experimental
innovative
Emerging
1
1
Sensor Technology: an experimental technology which uses sensors (e.g. video technology which detects gender or age) to trigger or customize an experience.